Why is there a sudden rush among companies like Reliance Industries, Tata Power, Tata Motors and DLF to sharply cut down on debt?

You are absolutely correct; it does look like now the large Indian companies are almost obsessed with debt reduction. In fact, that is the big trend among large Indian corporates as they have prioritized their cash flows to first reduce debt in these difficult times. This trend is almost business-agnostic and sector-agnostic. That is driving this trend, is the question.

Some of the names you put forward are the big names that are reducing debt but there are also scores of smaller and medium sized companies as they see debt reduction as the best use of surplus cash flows. Also this bull rally is giving the power of placing shares at premium valuations with investors giving a boost to the debt reduction plan.

The big shift began with the most valuable company in India, Reliance Industries. It declared its intent during an AGM to become zero net-debt. That was followed by a slew of private placements of its stake in Jio Platforms and Reliance Retail, Reliance had the heft to raise funds during the pandemic and also successfully complete the Rs.52,000 crore rights issue.

But there are more such large corporates. DLF sold a significant stake in its commercial realty franchise to GIC of Singapore towards becoming zero debt. Tata group companies like Tata Motors and Tata Power have already embarked on aggressive and ambitious plans to cut down on debt.

And then there is the Birla group too. Cement leader, Ultratech, recently made Rs.5477 crore outlay to expand its cement capacity. However, the company was also very particular to clarify that this outlay would not impact its debt reduction plans. That seems to be the trend now.